Discount Life Assurance

How brokers keep offering you value by reducing their commissions.

Discount life assurance policies aren’t less effective- discounting is employed by brokers to give you a better deal, by sharing their commission with you in order to reduce your premiums. Going to a broker is almost always as economical as approaching the life company directly.

Life products and financial advisers are a bit like medicines and doctors. Some medicines are simple and clear enough to use that you don’t need to see a doctor in order to buy them; you can get them over the counter at your chemist. Similarly, some financial products, like term assurance, are simple enough to understand that you can obtain them without additional advice- indeed you can buy term assurance in supermarkets or online.

Other products, like full life assurance, have sufficient permutations, and are sufficiently expensive if you make the wrong decision, that an intermediary is required. With these products, there are therefore three people in the transaction: yourself, the adviser, and the life company.

When we talk about discount life assurance, we are therefore referring not to a “cheap and nasty” product, or a less effective product, (although there are plenty of them around!) but a change in the financial relationship with one of those parties. For you, the consumer, you will have little interaction with the life office itself in terms of the price you pay. To understand how discount life assurance works, you have to understand the potential for the adviser.

If you paid just £50 per month into a policy over 30 years, the total invested would be £18,000. On top of that, the investment would yield an even greater sum. In total, the adviser will receive a generous remuneration for the three or four hours work required to get your business. A discount life assurance policy means the adviser shares some of that remuneration back with you; thus lowering your premium. This has made the life market a little more competitive- and is excellent news for customers.